Warehouse Wisdom. Weekly. 12/08/2023

Only the most relevant news for SMBs to improve logistics – picked, packed, and delivered without the bias.

Author

Will Schneider
December 08, 2023

Happy Friday!

Last week we reported record breaking sales over Black Friday, Cyber Monday (BFCM). But some unique factors may have driven those early sales, including wider adoption of online shopping, deeper discounting levels, and cooler temperatures in many parts of the U.S. That’s raised questions about whether consumers’ appetite to spend will continue. Even the National Retail Federation has tempered its holiday related growth projections to 3-4% (down from the 5% average over the last decade).

So, what should we expect for the month of December and into the next year? If the slowing warehouse construction and increasing Amazon warehouse subleasing we are reporting this week are any indicators, the record-breaking BFCM sales could be a false alarm. But it’s not all bad news, as we also cover some impressive new warehouse tech, package durability testing, and more! Let’s dive into to this week’s edition…

LOGISTICS VITALS

WAREHOUSE MANAGERS ARE HELPING WORKERS AVOID THE HOSPITAL BED

As you’ll read later in our newsletter, truckers and Amazon delivery drivers feel overworked and underpaid. Even parcel delivery drivers are facing the threat of carjacking. With all that pressure, the last thing you need is for your warehouse staff to get injured. And according to the Bureau of Labor Statistics, working in the transportation and warehousing industry is downright dangerous – more than any other, in fact. Perhaps it’s a good time to review your safety policies during the holidays and throughout the year:

  • 4.8% - the average injury and illness rate in the transportation and warehousing industry, which is the highest of all industries studied.

  • 52% - the percentage of injuries reported due to overexertion.

WAREHOUSE TECH

ROBOT ARMS AND SMART LABELS ARE MAKING WAREHOUSE STAFF JUMP FOR JOY

This week, warehouse tech gets interesting, with a few new product launches that brings out the inner “nerd” in us warehouse folk. U.K-based Reelables, has created the first shipping label embedded with a tracking device that is connected to 5G cellular! The labels are printable at scale from a thermal barcode printer and allow parcel deliveries to be tracked without manual barcode scanning intervention, giving shipments full visibility as they move through the supply chain.

This type of technology could change the way small parcel packages are tracked, eliminate manual error, and give real-time scope on exactly where those packages are located at any moment. Just think of the smiles on your customer’s faces as they can view their package real-time, as well as the potential for circumventing lost packages!

But the fun doesn’t stop there – Rightbot announced that it is in the works on developing robots to unload those nasty unpalletized freight containers! Floor loaded containers have long elicited groans from warehouse receiving staffs the world over, and now this “robot arm” technology is poised to put smiles on their faces and alleviate that horrible back pain. Using a conveyor belt, robotic arm with a suction cup, and a camera with computer vision, the company claims that the robot can automatically unload trucks, trailers, and container ships. Now if only the powerful robot arm could take care of purchasing those last items on your Christmas shopping list…

WAREHOUSE OPERATIONS & SUSTAINABILITY

AMAZON IS THROWING AROUND PACKAGES LIKE CRASH TEST DUMMIES

This week we’re taking a sneak peek into Amazon’s warehouse operations to see how packages are being delivered more sustainably. In its’ latest initiative, the company is attempting to ship packages without additional Amazon packaging. How do they do it? Testing, testing, testing!

In partnership with the International Safe Transit Association (ISTA), Amazon has developed a series of tests to simulate all the adverse conditions a package goes through from dock to door. The testing includes vibration tables to simulate traveling in different vehicles, drop tests to simulate hitting the ground, compression tests to simulate the weight of other packages stacked on top of it, a test for large items to ensure durability when carried by a forklift, and even a test to simulate hitting the wall of a truck.

This is an amazing way to reduce packaging and positively impact the environment, especially as those e-commerce orders grow in volume. Of course, if you don’t want to rely upon Amazon’s judgement and would prefer to be shipped in the cartons with a smile, users can still opt into Amazon boxes by selecting “Add Amazon packaging”.

Our only questions is – can these newly tested packages withstand the overworked delivery driver’s end of day toss onto the customer’s doorstep?

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WAREHOUSE AND LOGISTICS JOBS

TRUCKERS AND PILOTS ARE PITCHING A HEALTHY NEW YEAR’S BONUS

Apparently, truckers’ are feeling like they aren’t getting the respect (and money) they deserve. According to a survey by Lance Surety Bonds, truckers anticipate working 15 hours extra per week during the holidays, including 38% that believe they will be working on Christmas. A whopping 25% of all respondents indicated that they are considering looking for another job.

And pilots delivering Amazon packages are feeling grumpy as well. U.S.-based Air Transport International voted to authorize a strike, complaining of low pay compared to other carriers. In fact, over the last few years, pay, benefits, and schedules have become increasingly uncompetitive. But the pilots can’t walk out until at least next year, after mediation and a mandated 30-day cooling-off period. More than a third of the airlines’ pilots have left the company so far this year, and 27% departed the company last year.

Looks like truckers and pilots need a good old fashion raise or surprise bonus. We’re just hoping it’s not a subscription to the jelly of the month club.

COMMERCIAL REAL ESTATE

WAREHOUSE CONSTRUCTION NO LONGER POPPING UP LIKE MUSHROOMS ON A WET LAWN

According to recent research by Collier’s, warehouse construction starts have fallen sharply. Not only have industrial vacancy rates increased to 4.6% in the third quarter, but also construction fell 17% to 546 million square feet. What’s worse is that completions could dive up to 71% through 2024. But apparently this nosedive in output is “just what the doctor ordered”, according to Craig Hurvitz, director of Colliers’ national industrial research team, and signals a healthy market responding quickly and appropriately to slowing demand and higher costs of capital.

Warehouse construction across North America has also brought with it some uninvited guests – regulators looking to mitigate warehouse sprawl and adverse impacts on locals environments and communities. New Jersey is the latest state to target new legislation, and recently a new bill was brought to the floor to fight the warehouse boom.

In this proposed pilot program, municipalities would update their ordinances to gain control over where warehouses can and cannot be located. Seems like residents are tiring of the traffic, noise, and pollution that comes with all those newly constructed warehouses.

Even Amazon is feeling the freeze in the commercial space. The company listed roughly 1.5 million square feet of its distribution facilities for sublease in October, the most in over a year, according to CoStar. More of the company’s recent space offerings involve sublease opportunities through 2030 and beyond, in larger, newly built distribution properties, in its quest to offset the costs of its over expansion.

ONLINE MARKETPLACES

AMAZON IS UPDATING SELLER FEES LIKE A MAGICIAN WITH A DECK OF CARDS

Could it be true? A decrease in fees for Amazon fulfillment services? Well…not exactly! The company announced some changes to its overall pricing methodology, to “more closely align fees for sellers with our underlying costs and also provide sellers with more choices for how they use our services, allowing sellers to choose where they want to have Amazon take on different aspects of fulfillment and where they want to do the work themselves.” While pitching these changes as a more transparent pricing structure that gives sellers more control, the updates appear to be numerous with pricing most likely continuing to be difficult to digest and understand.

Nonetheless, some of the highlights include decreasing FBA fulfillment rates for some products, cost savings when products can be shipped in their own packages, reduction in non-peak storage fees, and reduced referral fees for apparel products. There are some definite golden nuggets in the announcement but be prepared to read through the changes carefully.

And Walmart, the number 2 online retailer in North America, announced that it nearly doubled its orders fulfilled and shipped through the Walmart Fulfillment Services program over the Cyber 5 period this past month. Not bad…but Walmart still lags behind the number 1 online retailer, Amazon, by a mile.

WAREHOUSE QUICK DELIVERIES

FREIGHT VOLUME IS FALLING, AND MORE…

❝

“People are just about tapped out, but [with] the holiday season, people are willing to even further extend themselves [before a predicted recession]”

-Scott Wren, Wells Fargo